Zalando CEO Robert Gentz: ‘We are building the AWS of the fashion world’

European fashion powerhouse Zalando’s CEO and co-founder Robert Gentz said that the company is moving from being an e-commerce retailer to a platform provider for the fashion industry with data science at its core.

Zalando was founded in Germany in 2008 by Robert Gentz and David Schneider to sell shoes and other fashion and lifestyle products. The company employs close to 8,000 people, is listed on the Frankfurt Stock Exchange and reported 2014 revenues of €2.2bn.

“Understanding our customers, and gaining deep insights into their purchasing patterns and their behaviour online means we can provide them with a personalised and compelling offering,” Gentz said at the time.

Zalando is one of a growing cluster of digital businesses that have located in Dublin and whose very engine oil is data.

‘Consumers don’t come to Zalando because we sell them fashion. They come to us because we provide them with solutions and convenience’– ROBERT GENTZ, ZALANDO

Recalling the early days of Zalando in 2008, in the midst of the banking crisis, Gentz said that gaining data insights was key early on, mainly because with money tight maintaining the correct inventory to meet consumer demand was essential.

“Consumers really demanded a good selection of shoes and we were very heavily reliant at the time on managing the correct inventory.”

Shrewd attention to detail paid off and revenue grew from €116m in 2010 to €500m a year later and by 2014 the company grew revenues to €2.2bn.

The company grew from its base in Germany to over 15 markets across Europe and now accounts for 0.05pc of fashion apparel sold in Europe. In Germany alone Zalando accounts for 5pc of all shoes sold in the country.

However, Gentz said that Zalando is undergoing a digital transformation from being a pureplay retailer to providing a platform that fashion brands, retailers, designers, manufacturers and all segments of the fashion industry can plug into.

“From a consumer perspective we see big opportunities in mobile and we are moving from a retail model to being a platform model. We want to become the Amazon Web Services (AWS) of fashion and play a bigger role.

“We think we can create a good place for connecting all the different players in the fashion business on one single platform and do business.”

Data is the oil of the 21st century

To achieve this vision of becoming the AWS of fashion, Gentz said the key is to have the best proprietary data on the fashion sector to help brands find the right consumers, help consumers find the merchandise they desire and help factories to connect to designers and better understand trends.

“It all comes down to data at the end of the day. The best data, making use of the data to drive synergies in this fashion segment.

“Within Germany we already have a team of 60 or 70 data scientists and we are constantly looking for the best talent out there. We see our niche and there is a big opportunity for us to become one of the best internet technology companies in Europe.

When it came to building one of the best fashion insight centres in Europe, Gentz said the logical choice was Dublin.

The VP of engineering at Zalando Eric Bowman told Siliconrepublic.com that having worked in Dublin for 12 years he was impressed with the strong talent pool being developed and the organisations that IDA Ireland was attracting to the city.

‘What we look for most from people is a passion to learn, a passion to build and a passion to solve problems’– ERIC BOWMAN, ZALANDO

“One of the things we are doing here is combining engineering with data science and we are building a platform to collect, store, analyse and make available vital fashion insights.

“Over the course of my time in Dublin I have been impressed with the quality of talent in Ireland, which is extraordinary and gives us a compelling reason to do this here.”

Bowman said that Zalando is focused on hiring research-oriented scientists. “We are looking at different skill sets, particularly pattern detection. We are looking for people with a background and interest in big data technologies. We are actually building this platform on AWS, so we are looking for people with a background in building IT projects and platforms to scale.”

He describes Zalando’s approach to data science as generic. “A lot of people are taking different approaches. We are taking our own approach, which involves integrating data scientists with engineers.”

He said the purpose of this is that by allowing data scientists to work more closely with production it will result in modern tools.

“We found the older approaches were not working at the scale we would have liked. We are building our own tools to support our vision and enable the fashion industry.”

Attesting to the quality of talent in Dublin, Bowman said that 80pc of the hires Zalando has made so far in Dublin are Irish.

The intricate future of fashion

Gentz said that the fashion business is changing along with consumer needs.

“Consumers don’t come to Zalando because we sell them fashion. They come to us because we provide them with solutions and convenience.

“Rather than taking on inventory and doing everything on our own we are creating a homogenous demands solution that we can bring closer to the consumer and use technology to move away from physically managing inventory.

“This movement in the fashion industry is not only happening in Europe but also in Asia and we see similar developments as entire sections of the value chain are dissected and connecting merchandising and consumers in a great, more fluid way becomes critical.”

Tailor-made solutions

Bowman explained that rather than buying in existing big data and analytics platforms Zalando is creating its own custom tools.

“Zalando has a history and culture of building a lot of things ourselves. We have a comfortable understanding of what the best-of-breed technologies are out there, we can improve on them and we use open source.

“Our focus is on understanding this data from a fashion point of view.

“We already have a lot of data and there is so much insight buried in that data – but a lot of it is also about people’s emotions and how they connect to fashion. Fashion is such a primal thing – on the one end you have haute couture but at the end of the day everybody has to wear clothes in a way that enables them to be different, find relationships… and that’s the appealing thing about analysing data, helping customers to get what they want.”

While analytics and data science evoke complexity, Bowman said that, actually, data science can be fun.

“What we look for most from people is a passion to learn, a passion to build and a passion to solve problems,” Bowman concluded.

“We have a lot of interesting problems but we are also building a great team of people who love to work together and solve hard problems.”

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